Write-Down
Definition
Reducing the recorded value of an asset to reflect a fall in its worth — for example inventory to net realisable value — without removing it entirely. A full removal is a write-off.
Related Terms in Core Accounting
Capital Account
The equity account recording the owners' investment in a business and their share of accumulated profits. In partnerships and proprietorships it tracks contributions, drawings and profit shares per owner.
Drawings
Money or goods an owner takes out of a sole proprietorship or partnership for personal use. Drawings reduce the owner's capital and are not a business expense.
Trial Balance Errors
Mistakes that a trial balance may or may not reveal. A trial balance catches errors that unbalance debits and credits, but not errors of omission, commission, principle or compensating errors, which leave it balanced yet wrong.
Bookkeeping vs Accounting
Bookkeeping is the systematic recording and organising of financial transactions; accounting builds on that record to classify, summarise, interpret and report. Bookkeeping is the data layer, accounting the analysis layer.
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